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State-owned Oil and Natural Gas Corp (ONGC) had in December last year agreed to buy the entire 80 percent interest of GSPC along with operatorship rights, in Deen Dayal West (DDW) gas field in Block KG-OSN-2001/3 in the Bay of Bengal for $995.26 million (Rs 6,443 crore).

The company had also agreed to pay part consideration of $200 million (Rs 1,295 crore) to GSPC towards acquisition rights for discoveries other than DDW field in the block.

ONGC said it has paid the money to complete the acquisition after getting the green signal to complete the deal from the government in July.

GSPC, a Gujarat government firm, will remain in the Block holding 10 percent stake which it acquired from the outgoing partner Geo Global Resources, it said. The remaining 10 percent interest is with Jubilant Offshore Drilling Ltd.

ONGC and GSPC had entered into a farm-in-farm-out agreement on March 10, 2017, to firm up the methodology and modus operandi to give effect to this transaction.

ONGC Statement

"Following approval of the Government of India for transfer of participating interest and operatorship as per provisions of the Production Sharing Contract, ONGC today has taken over the block," the company said in a statement.

ONGC said the acquisition fits well with its strategy to enhance natural gas production from domestic fields at a faster pace.

The trial gas production from Deen Dayal West field began in 2014 and commercial production from April 1, 2016.

The company plans to use GSPC field facilities to bring to production the discoveries in its neighbouring KG-DWN-98/2 block.

GSPC, with a debt of Rs 19,716.27 crore as on March 31, 2015, has so far made 9 gas discoveries in the Bay of Bengal block. Of these, three -- KG-08, KG-17, KG-15 commonly known as DDW fields - have been approved for development.

But against an approved field development plan (FDP) cost of $2.75 billion, GSPC has seen huge cost overrun, incurring $2.83 billion as on March 31, 2015. Additionally, it had run up an exploration cost of $584.63 million, taking total expenditure as on March 31, 2015, to $3.41 billion.

As per the FDP, 12 more development wells are yet to be completed, which will further bump up the project cost.